RBA: Mortgage arrears hit decade high levels, but unlikely to increase

The national mortgage arrears rate has reached its highest level in a decade at 1%, with households in Western Australia and the Northern Territory showing the most cause for concern. 

The new figures were revealed by Reserve Bank Deputy Governor, Guy Debelle, in a speech in Sydney last Friday, though he maintained that while the ongoing rise in households defaulting on their home loans is worth scrutinising, arrears rates are still relatively low.  

“The mortgage arrears rate, at 1 per cent, is low by both historical and international standards. Arrears in the US peaked at around 10 per cent in the financial crisis,” he said. 

“This is not surprising in an environment where the unemployment rate is low and interest rates have been declining. Nonetheless, the arrears rates have been increasing steadily over recent years to the highest it has been for around a decade, and so warrants some scrutiny.” 

According to the RBA, mortgage holders generally go into arrears as a result of an unexpected loss of income such as losing their jobs, suffering health problems or having a breakdown in their relationship.    

In the case of the most recent figures, the RBA has suggested that rising levels are being driven by the fact that loans are staying in arrears for a longer period (90 days and more), rather than more loans actually entering arrears.   

RELATED: Australians dishing out $40,000 in extra costs when buying property

The figures also show that rates of arrears are not spread evenly across the country. 

Western Australia and the Northern Territory currently have the highest rates of mortgages in arrears, with the rate in Western Australia having risen from 0.70% to 1.80% on the back of rising unemployment and falling house prices in recent years. 

Despite the recent national upward trend, Debelle stated that a number of factors are likely to but “downward pressure” on mortgage arrears.  

“...it seems unlikely that the national arrears rate will increase substantially from here. Improvements to lending standards have placed downward pressure on arrears.” 

“In addition, the recent reductions in the interest rates will reduce the interest payments of indebted households and support employment growth and housing market conditions more generally.”

What does going into arrears actually mean? 

While the proportion of Australian households that end up in arrears is relatively tiny, it may still be worth knowing what it actually means and what effect it could have on mortgage holders. 

“Basically being in arrears means that a borrower has not been making the required repayments on their home loan,” said Mozo Property Expert, Steve Jovcevski. 

“Technically you’re in arrears as soon as you miss a repayment, but things really start to get serious after about three months (90 days), which is roughly equivalent to three repayments being missed.” 

So what should you do if you think you may have difficulties in the future making your home loan repayments? 

Jovcevski suggests that borrowers take action as soon as possible, either by contacting their lender or thinking about refinancing. 

“If you've borrowed from a bank there are hardship clauses which mean that your bank may be compelled to offer you assistance if you go into arrears.”

“Unfortunately if you’ve already missed repayments on your mortgage it’s very hard to refinance. It won’t rule you out forever though, so if you are able to get back on track and showcase at least six months of clean repayments you’ll likely be able to refinance.” 

“Of course in an ideal world you would want to refinance to a lower mortgage rate and avoid going into arrears in the first place, before you miss a repayment.”  

RELATED: Digital home loans: saving Aussies time, money and paper

Want to learn more about refinancing and whether it might be right for you? Check out our refinancing tips & tricks guide for a comprehensive overview, or if you’re ready to pull the trigger then check out some of the great offers in the table below to see if you’re able to save on your home loan.

Refinance home loans - last updated 2 March 2024

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure
  • Offset Home Loan

    Package, Owner Occupier, LVR<60%, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    6.15% p.a. variable
    6.40% p.a.

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

  • Neat Home Loan

    Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    6.09% p.a. variable
    6.11% p.a.

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

  • Straight Up

    Obliterate, Owner Occupier, Principal & Interest, <50% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    6.24% p.a. variable
    6.24% p.a.

    Get a low variable rate depending on your deposit with Athena’s Straight Up Variable Home Loan. AcceleRATES feature helps you to reduce your home loan even faster (T&Cs apply). Zero fees to pay. Free redraw facility. Handy mobile app to manage your home loan.

  • Flex Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    6.64% p.a.
    fixed 3 years
    6.52% p.a.

    Competitive Fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.


* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.